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Putting a Price on Carbon - In Brief

December 1, 2007


Phil Davies Senior Writer
Putting a Price on Carbon - In Brief

Emission impossible?

  • To address climate change, many lawmakers are considering legislation to control carbon emission through cap-and-trade systems in which governments set emission limits but let firms buy and sell emission rights.

  • Economists tend to prefer emission taxes, which impose a levy on fossil fuels based on how much carbon dioxide and other heat-trapping gases they contain.

  • Applying economic theory to current scientific knowledge about climate change, economists have demonstrated that a price mechanism like an emission tax would minimize the risks of misjudging the uncertain costs of reducing greenhouse emissions. Hybrid programs, which combine quantity and price mechanisms, would also reduce those risks to some extent.

Putting a Price on Carbon [complete article]